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Why your company could benefit from employment contracts

One of the most complex and potentially challenging aspects of owning a Maryland business is dealing with employees. Good relationships with employees start with a solid foundation, and that should be a strong and carefully constructed employment contract. If your company does not use these agreements for all employees, you could be exposing your business to unnecessary risks.

Employment contracts should be suitable for your specific type of business and the types of roles your employees have. You can custom tailor your contracts for the specific role or responsibilities of the individual employee, or you can have one contract for everyone who works for your company. A careful assessment of your specific type of business can help you understand exactly what you need for security and protection.

What’s in your contract?

The more thorough the terms of your employment contract, the less likely it will be that you will experience confusion with the employee regarding the rights and responsibilities of both parties. Some of the things you may want to include are:

  • Circumstances that may be considered grounds for termination
  • How long the period of employment will last
  • Compensation, bonuses and structure for potential pay increases
  • Vacation days, sick leave and process for applying for time off
  • How to file a grievance in the event of a problem

These are only a few examples of the specific things you may find beneficial for your contracts. If your employees will have access to confidential information, company secrets or proprietary formulas, you may want on include terms that pertain to:

  • Confidentiality regarding what the employee can disclose to friends and family
  • If and when an employee can work for a competitor in the future
  • Who owns the product if the employee works in development

These types of agreements can protect your business from the potential of litigation and financial loss in the event there is a dispute with an employee.

Long-term benefits

One of the most beneficial steps you can take for the financial and legal interests of your business is to protect it against the potential for litigation. Employment disputes can be costly and stressful but having contracts for all parties lowers the chance of an issue. Each party will benefit from understanding their roles, requirements of employment and other details that are necessary for that specific job.